May 28 (Bloomberg) -- Morgan Stanley will hold a gathering
in New York to showcase Asian hedge funds to investors after
pulling its capital introductions event in China because of the
bird flu, said three people with knowledge of the matter.

Morgan Stanley told managers and investors last month the
annual forum scheduled for Shanghai between May 21 and May 23
would be postponed and relocated to New York in July because of
health concerns after the avian flu outbreak earlier this year,
said the people, who asked not to be identified as the
information is private. Xu Li, a Beijing-based spokeswoman of
Morgan Stanley, declined to comment on the delay.

The response reflects international concern about the new
virus, which has killed more than a quarter of the people known
to have been infected. Some investors and managers declined to
travel to Shanghai, said two of the people. Thirty-three cases
of the H7N9 avian flu -- 13 of them fatal -- have been reported
in China’s financial center, according to the municipal
government. No new cases have been reported there since mid-April, about a week after authorities imposed restrictions on
live poultry sales.

“It’s understandable but an over-reaction nonetheless,”
Peter Alexander, principal of Shanghai-based fund research
company Z-Ben Advisors Ltd., said of the bank’s clients’
reaction. “If you look at the number of cases, number of
deaths, it was coming down and it was nowhere near as bad as
SARS.”

SARS Losses

The H7N9 avian flu virus is known to have infected 131
people in China and Taiwan since March and killed 36 of them,
according to data from the World Health Organization as of May
24. It is capable of being spread from human to human,
scientists at the Chinese Center for Disease Control and
Prevention in Beijing, and the University of Hong Kong said
earlier this month after a study.

“When a new epidemic emerges with serious infections, it
does make people think twice about visiting infected areas,”
said Ben Cowling, infectious disease epidemiologist at the
University of Hong Kong’s school of public health. “People
tend to err on the side of caution.”

The actual risk of contracting the H7N9 virus depends on
exposure to live poultry, an unlikely scenario for many
travelers, Cowling added.

Chasing Assets

The Asian industry has struggled to recover assets lost
during the global financial crisis in 2008 as investors have
become more risk-averse and prefer large managers. Hedge funds
focused on the region oversaw a combined $139 billion at the end
of last year, 27 percent less than the end-2007 level, according
to AsiaHedge data. Globally, assets hit a record $2.4 trillion
by March, 27 percent above the 2007 figure, according to
Chicago-based data provider Hedge Fund Research Inc.

This was the first time the New York-based bank has had to
move the event out of the region since it began hosting it in
the communist country in 2005, said one of the people. In most
years it took place in Shanghai, home to the country’s largest
stock exchange, except on two occasions when it was held in
Beijing and in Hong Kong, the person said. About 60 Asia-focused
hedge funds are typically featured at the Morgan Stanley
conference, said the person.

Morgan Stanley was the second-largest prime broker in Asia-Pacific region this year by the 151 sole and shared mandates it
received from hedge funds, or 13 percent of industry total,
according to a survey by AsiaHedge released earlier this month.

The trade journal estimated that it commanded $21.3 billion
of client assets, a 14 percent share, placing the bank in the
third place behind Goldman Sachs Group Inc. and Credit Suisse
Group AG.